PDF of Apple’s Full iTunes Radio & iTunes Store Contract

Storm WilliamsJun 29, 2013

Paul Resnikoff of Digital Music News has posted the a PDF copy of Apple’s contract relating to iTunes Radio and iTunes Store

Resnikoff:

Here’s the complete, non-negotiable contract with Apple has been mailing independent labels and artists ahead of the iTunes Radio launch. It offers complete details on iTunes Store payouts, iTunes Radio per-play rates, and seems to confirm earlier information about forced tying between the iTunes Store and iTunes Radio. It even delves into specifics about what iTunes Radio will look like.

Here is part of the Contract, full pdf at source:

v16

40 of 42

(i)

“Listener” means an end user of the Radio Service who has established an Online Store accountin the applicable country of the Radio Service Territory.(j)

“Listener Hour” means sixty (60) minutes of the Radio Service delivered to a Listener, including,without limitation, Performances, advertising, talk, weather, news and any other content deliveredas part of the Radio Service, provided that ITUNES may exclude from the calculation of aListener Hour the minutes (or fraction thereof) of audio delivered to Listeners via the RadioService that are (i) advertisements by ITUNES advertising the availability of particular soundrecordings for sale as downloads on the Online Store and (ii) de minimis in length announcer lead-ins and/or lead-outs announcing the sound recording and/or artist that is about to be performed or had just previously been performed on the Radio Service.(k)

“Listener Matched Content” means sound recordings identified by ITUNES using customarymeans as being in a Listener’s personal music collection.(l)

“Net Advertising Revenues” is defined as gross advertising revenue (including throughsponsorships) recognized through the delivery of ads by ITUNES as part of the Radio Service,less actual third-party agency and agent fees, discounts, commissions and referral fees paid byITUNES and actual fees paid to third party data and services providers that facilitate ad sales or delivery (collectively and in the aggregate, capped at three percent (3%) of gross advertisingrevenue per month). Any advertising or placement through the Radio Service of Apple music products or services (e.g., iTunes music downloads, iTunes Match, etc.) shall be free to ITUNES(i.e.. shall be at a deemed CPM of zero). Nothing herein shall limit ITUNES’ ability to include areasonably limited amount of free or reduced cost inventory in support of bona fide third-partyadvertiser campaigns where ITUNES deems it beneficial to do so (e.g., in support of surveys thataccompany campaigns, as make-goods, as part of bonus/test campaigns, or under other similar circumstances).(m)

“Performance” means each Digital Audio Transmission of any portion of a sound recording to aListener through the Radio Service, other than an Incidental Performance.(n)

“Radio Service” means the radio streaming service owned by ITUNES and operated by or on behalf of ITUNES, which is provided free to users or ad-free as part of the Cloud Service for noadditional charge, that makes available, delivers and markets the provision of Webcasts solelythrough the Apple Media Player, and conforms to the Functionality Overview.(o)

“Radio Service Territory” means the United States.(p)

“Royalty Bearing Performance” means each Performance of an individual sound recordingthrough the Radio Service, excluding: (i) any Performances to Invited Beta Testers during theLimited Beta Testing Period; (ii) up to six (6) Performances of individual sound recordings whichare not rendered for more than twenty (20) seconds in duration each (i.e., skips), per Listener per hour per channel or station; (iii) up to two (2) Performances per Listener Hour (measured in theaggregate across all Listener Hours in a given month)

where the Performance is either (A) of Listener Matched Content, (B) a Complete-My-Album Play, or (C) a Heat-Seeker Play; and (iv)any Performances to Listeners who are Cloud Service Users.(q)

“Webcast” means any Digital Audio Transmission (including Performances and IncidentalPerformances) made via the Radio Service.2.

Authorization.(a)

COMPANY hereby grants to ITUNES the right, in the Radio Service Territory, to:

v16

41 of 42

(i)

publicly perform and make available by streaming eMasters to Listeners by means of Webcasts (i.e., for the avoidance of doubt, in accordance with the statutory license under 17 U.S.C. § 114(d)(2) for eligible nonsubscription transmissions (as defined in 17 U.S.C.§ 114(j)(6))); and(ii)

display Artwork to Listeners via the Radio Service in connection with Webcasts of thecorrespondingeMasters.(b)

During a period of no more than one hundred twenty (120) days following the Effective Date (the“Limited Beta Testing Period”), ITUNES may use and exploit COMPANY Content as set forth inthis Exhibit K without regard to paragraph 3(a) below for the sole and limited purpose of enablingcurrent ITUNES employees, registered Apple developers, bona-fide members of the press andmedia, and selected representatives of licensors (the “Invited Beta Testers”) to evaluate and testthe Radio Service and the Apple Media Player, and to provide feedback to ITUNES so thatITUNES may develop and refine the user experience and technical implementation of the RadioService. In each case, the Invited Beta Testers will be subject to customary terms of use,confidentiality requirements or employee policy guidelines, as the case may be.3.

Royalties, Payment and Reports.(a)

Royalties. ITUNES will pay to COMPANY, in consideration of the authorizations related to theRadio Service set forth herein: (i) for the Initial Year, the sum of (A) US$0.0013 per RoyaltyBearing Performance of COMPANY Content in the applicable month, and (B) the applicablemonthly COMPANY Share multiplied by 15% of Net Advertising Revenues; and (ii) for theremainder of the Term, the sum of (A) US$0.0014 per Royalty Bearing Performance in theapplicable month, and (B) the applicable monthly COMPANY Share multiplied by 19% of NetAdvertising Revenues (“Radio Service Royalties”).(b)

Minimum Radio Service Royalties. Notwithstanding the foregoing, Radio Service Royalties payable by ITUNES to COMPANY hereunder in any given quarterly period of the Term shall beat least:(i)

the quarterly COMPANY Share of forty-five percent (45%) of the Net AdvertisingRevenues for such quarter; and(ii)

on a Revenue Per Thousand Listener Hours (RPM) basis, (A) twenty-one dollars andtwenty-five cents (USD$21.25) in each applicable quarterly period in the Initial Year and(B) twenty-two dollars and twenty-five cents (USD$22.25) in each applicable quarterly period for the remainder of the Term. For purposes of this paragraph, “Revenue per Thousand Listener Hours (RPM)” means the Radio Service Royalties in the applicablequarter divided by the number of Listener Hours in such quarter, multiplied by onethousand (1,000).(c)

Payment and Reports. Subject to Apple’s standard business practices relating to the RadioService (e.g., format and timing of reports and payments), Payments and the related Sales Reportsshall be made monthly in accordance with the terms of Section 8(b) of the Agreement applicableto eMaster Proceeds.

v16

42 of 42

4.

Functionality Overview. As of the Effective Date (and subject to Paragraph 1(f) of this Exhibit K), theParties acknowledge that the Radio Service satisfies the eligibility criteria for a statutory license under 17 U.S.C.§ 114(d)(2) for eligible nonsubscription transmissions (as defined in 17 U.S.C. § 114(j)(6)), including thefollowing functionality:(a)

DMCA Performance Complement. Except as expressly authorized by COMPANY in performance complement waivers,

all channels and stations will follow the DMCA performance complement.(b)

Format Stations. Some channels and stations may consist of pre-programmed playlists that arereasonably equivalent or analogous to traditional terrestrial radio program formats, music genresand subgenres, etc.(c)

Customized Channels and Stations. Channels and stations may be dynamically created “on thefly” utilizing ITUNES’ proprietary programming algorithms, and customized based on variousfactors related to the particular Listener.(d)

Skipping. Listeners may be permitted to skip forward up to six (6) Performances per channel or station in any one (1) hour period.(e)

Buy Buttons. A “buy now” link or button, containing an offer for the Listener to purchase thecorresponding eMaster through the Online Store, will be displayed while the eMaster is beingrendered for playback.(f)

Electronic Program Guide. The Radio Service may include an electronic program guide whichdisplays the sound recordings then being rendered for performance (but no pre-announcements)on channels and stations other than the channel or station that is then being listened to by the particular Listener.(g)

Other Restrictions. No rewinding, backward skipping or re-starting will be permitted (butresuming a paused song shall be permitted).(h)

Cloud Service Users Ad-Free. Cloud Service Users may receive the Radio Service free of advertisements.(i)

Artwork. Artwork corresponding to eMasters may be displayed while the corresponding eMaster is being rendered for playback, and as part of a “history” of sound recordings rendered for performance to that Listener through the Radio Service in the past.(j)

Content Protection. COMPANY Content used in connection with the Radio Service will be protected no less than any other third party content used in connection with the Radio Service.